Editorial: Yes on Santa Cruz County, city hotel tax measures

Tourism is a major industry for Santa Cruz County, drawing visitors who spend in local shops and restaurants and who, if they stay in a local lodging establishment, also contribute to the local economy by paying taxes on their nightly room rates.

But in the aftermath of years of budget cutting, both the county and the city of Santa Cruz this year are asking voters to let them raise the hotel tax.

Both tax hikes are relatively moderate and were worked out in cooperation with the local hospitality industry, which feared bigger increases that could have scared off tourists. The county measure will require approval of a majority of all voters in the county. The city tax only goes before Santa Cruz residents.

Measure N is the ballot measure county residents will be voting on. It raises the lodging tax 1.5 percentage points, to 11 percent, on lodging establishments in the unincorporated area of the county. The tax had long been 10 percent, but was lowered last year because of a technicality. The money raised would go into the county's general fund, which funds basic services such as law enforcement, fire, parks, public works and youth recreation programs. Another benefit of this revenue is that it is immune from the clutches of the state.

The county already has seen a significant uptick in revenue from this tax -- known officially as the transient occupancy tax -- after requiring vacation rental owners to start paying the levy. The tax brought in nearly $4.7 million in 2011-12, up $600,000 from the previous year. The tax hike is expected to raise another $525,000-$725,000 annually.

The local hotel owners and operators were able to strike a deal with the county that kept the tax proposal from soaring to 12 percent by reducing the amount the county pays to support the Santa Cruz County Conference and Visitors Council.

Santa Cruz city voters are also being asked to approve raising the hotel taxes to 11 percent. As with the county measure, there is no organized opposition. The Santa Cruz hike would raise an additional $470,000 annually.

The CVC, which gets much of its funding from a room surcharge dedicated to the tourist bureau, supports both TOT measures.

Capitola, which has TOT of 10 percent, considered a similar increase, but with voters already being asked to approve a quarter-cent hike in the sales tax, leaders decided to defer a ballot measure. For comparison, Monterey has a 10 percent rate -- but other regional coastal cities, including Seaside, Marina, Half Moon Bay and Pacifica, are at 12 percent.

Voters haven't always looked kindly on TOT increases in Santa Cruz. In 2000, city voters voted down a proposal to raising the tax to 12 percent when the additional 2 percent was designated to fund homeless services. Two years later, voters rejected a 1 percent increase to provide funding for the visitors council.

The new measures, however, are both moderate and sensible. Vote yes on Measure N and, in Santa Cruz, Measure Q.